DEVELOPING A BUSINESS PLAN

Now that you know the details of your business, you need to put everything on paper. Writing these details will help you visualize all the aspects of your business. It will also help you convince banks and other people to invest in your business idea.

BUSINESS PLAN  DEFINITION – a written document that describes all the steps necessary in opening and operating a successful business.  FACT: Writing a business plan is one of the most difficult and important things you will do as an entrepreneur.  FACT: Writing a solid business plan can make or break your business

BUSINESS PLANS  Why Do You Need a Business Plan?  What Goes into a Business Plan?  Creating an Effective Business Plan

WHY DO YOU NEED A BUSINESS PLAN? A Business Plan serves three main purposes:  Explains the idea behind your business and spells out how your product or service will be produced and sold.  Sets specific objectives and describes how your business expects to achieve them  Describes the backgrounds and experience of the people who will be running the business

A GOOD BUSINESS IDEA: new better or less expensive Identifies a new product or service or one that is better or less expensive than products or services that already exist Identify your target market Show how you will be able to obtain and keep customers

A Business Plan is important for several reasons:  Makes you think about all aspects of your business  Helps you secure financing for your business  Helps you communicate your ideas to others  Serves as a tool for managing your business WHY DO YOU NEED A BUSINESS PLAN?

WHAT GOES INTO A BUSINESS PLAN? There are SEVEN basic elements of a BUSINESS PLAN

HISTORY & BACKGROUND This section of your business plan should describe how you came up with your business idea

GOALS AND OBJECTIVES This section of your business plan should outline your short-term, medium term, and long-term goals. It should describe your vision of where you want your company to be in the future.

PRODUCTS OR SERVICES This section of your business plan should describe the products or services your company plans to produce and sell.  How are your products or services different from those already on the market?  How will your product or service benefit the customer by purchasing from you?  Describe the location of your business  Include current information about the industry

FORM OF OWNERSHIP This section of your business plan should detail your form of ownership.  Sole Proprietorship  Partnership (List Partners)  Corporation

MANAGEMENT AND STAFFING This section of the business plan should show that you and the people who will be working for you have the experience, maturity, and common sense to manage your business well.

MARKETING This section of the business plan should include information on marketing your business.  Explain who your prospective customers are  How large the market is for your product or service  How you plan to enter the market  How you plan to deal with competition

CURRENT & PROJECTED FINANCIAL STATEMENT This section of your business plan will consist of three elements:  Identification of risks. What risks will your business face and how do you plan to deal with them. (i.e. competitors cutting prices, costs exceeding projections, demand declining over time)  Financial statements. Include projected revenues and expenses  Funding request and return on investment. Indicate how much you need to borrow and how you plan to use the money. Also include how much money you are investing in the business.

CREATE AN EFFECTIVE BUSINESS PLAN Your business plan needs to convince readers that you have come up with a practical business idea. Researching and writing a business plan takes time. In fact, most entrepreneurs spend 50 to 100 hours developing their business plans. The process requires patience, research, thought, and a great deal of writing and editing.

RESEARCH THE BUSINESS PLAN Pulling together the information you will need to write your business plan involves researching all aspects of your business. This will teach you a great deal about running a business and may provide you with specific ideas for starting your company.

RESEARCH RESOURCES  Print Resources: Books from library, magazines, government documents  Online Resources: Information from the internet (SBA Website)  People Resources: Business counselors, local Chamber of Commerce, Small Business Development Centers  Additional Resources: Professional business consultants, industry personnel

PUT YOUR BUSINESS PLAN TOGETHER Your business plan is your best opportunity to let other people know what you want to do with your company. To make the best of this opportunity, you will want to create an attractive document that is neat, well-organized, and inviting to read. Handwritten business plans are not excepted.

BUSINESS PLAN FORMAT Introductory elements of the business plans are:  Cover Sheet  Cover Letter  Table of Contents  Statement of Purpose  Executive Summary **These elements help set the tone for the body of your business plan.**

BUSINESS PLAN FORMAT Main body of the business plan contains:  History and background  Goals and objectives  Products or services  Form of ownership  Management and staffing  Marketing  Current and projeced financial statements  Appendix - the section of the plan that includes any supporting evidence that was not included in the body of the report.

COVER SHEET The cover sheet of your business plan should include:  The name of your company  The date  The owner(s) of the company  The title of the owner(s)  The address and phone number of the company

COVER LETTER Definition: A letter that explains or provides more information about a document or set of documents. The cover letter should :  Give your name, the name of your business, and your address and telephone number.  Briefly describe your business and its potential for success.  Tell the reader how much capital you need.

TABLE OF CONTENTS Definition: A listing of the material included in a publication.  Shows the reader that each page covers  Make sure the sections are in the correct order  Check that the page numbers shown in contents are correct

STATEMENT OF PURPOSE Briefly describes why you are asking for a loan and what you plan to do with the money if you receive it. It should be no more than one or two paragraphs.

EXECUTIVE SUMMARY A short restatement of a report. It should capture the interest of its readers and make them want to read more. It should:  Describe your business concept and communicate your unique idea  Include your projections for sales, costs, and profits  Identify your needs (inventory, land, building, equipment, etc.)  State the amount you are interested in borrowing NOTE: Although the executive summary appears before the business plan, it should be written after the business plan has been completed. Find the most important and persuasive points you have made, then draft your executive summary.